Save energy and money with demand side response for your small business

Save energy and money with demand side response for your small business

Learn about demand-side response, how it can save businesses money, and what it looks like in practice.

Edinburgh-based business, Flexitricity, is trialling an exciting new development in the field of demand-side response. The business has secured just under £500,000 in funding from the Department for Business, Energy and Industrial Strategy (BEIS) to trial its Quickturn project.

The Quickturn project is an example of how demand-side response could soon open new cost and carbon saving opportunities for small and medium-sized enterprises (SMEs) across Scotland.

We spoke to Helle Häng from Flexitricity to find out more about demand-side response, how it works, and how it could soon be a way for Scottish SMEs to cut their energy costs and support Scotland’s transition to a low carbon economy.

Q: What is demand side response?

Demand-side response is where businesses are financially incentivised to reduce or increase their energy use to provide flexibility to National Grid as and when it needs it.

When a business takes part in demand-side response, typical processes that they turn down or off include lighting, air-conditioning, electric heating, pumps and other non-essential equipment. That is, processes that, in the short term, will not impact on their day-to-day business operations. Businesses taking part in demand-side response can also be incentivised to use excess energy from the grid, for example on a windy day.

Large energy users (such as hospitals, universities, industrial manufacturers, supermarkets, data centres and greenhouse complexes) have been able to benefit from demand-side response for quite a while now. Indeed, Flexitricity’s founder, Dr Alastair Martin, first pioneered the concept back in 2004. Essentially, demand-side response helps to create a greener and fairer energy system where revenue goes to the hands of UK businesses, not just the large energy suppliers.

Q: Why is it needed?

National Grid needs to match electricity supply and demand exactly every second of the day. But electricity consumers don’t ask for permission every time they turn on a light, kettle or TV; or plug in their electric vehicle to charge.

In addition, traditional energy generators such as large nuclear, coal and gas-fired power stations are being replaced by cleaner, but intermittent, renewables. Wind turbines only generate when there’s wind.

Managing supply and demand is therefore not straightforward.

Demand-side response is about more intelligent energy use. The demand for demand-side response is higher now than ever before, and it has an important role to play in helping Scotland secure sustainable and affordable electricity where we use power when it is most abundant, affordable and clean.

Q: How does it save businesses money?

The primary business case for demand-side response is additional revenue and savings. Demand-side response not only allows businesses to avoid higher energy prices during times of peak demand, it also creates revenue for those businesses when they support the grid.

For many businesses, energy is one of their largest expenses. Demand-side response can help to significantly reduce this cost, which means the additional revenue can be invested back into the business to support growth and transform outcomes for users and customers. For a commercial greenhouse, it can mean keeping the price of their cucumbers low to attract more customers. A hospital can invest that additional revenue into patient care and purchasing new equipment, a district heating scheme can use it to help tackle fuel poverty and so on.

How much can be saved? Flexitricity has generated over £20 million in direct revenue and savings for its customers.

Q: What does demand-side response look like in practice?

It depends on the type of business and asset – that could be anything from building load (heating, ventilation and air conditioning systems for example) and combined heat and power to battery storage and heat pumps. The first step in the process is to identify the flexibility the business has in its consumption and/or generation profile.

For example, in a cold storage centre it might be possible to adjust the amount of energy going into the cold stores for short periods of time without disrupting the business or damaging stock. In a manufacturing plant, production can be cut or boosted at non-critical times to reduce or increase energy demand.

Flexitricity’s role is to aggregate small generators and energy users into a ‘virtual power plant’ to make them collectively attractive to National Grid.

Q: Why is it only big businesses that are benefiting just now?

Previously, participation in demand-side response has not been economically viable for smaller sites due to the cost of hardware, communications and implementation.

Q: The BEIS-funded research is investigating demand-side response in smaller businesses – what is happening?

In traditional demand-side response, 500kW realistically represents the lower end of the scale to make demand-side response economic. With Quickturn, we’re aiming to bring that down potentially as low as 40kW.

We are partnering with the University of Edinburgh’s Institute for Digital Communications to improve communication speed and reliability, and reduce the overall cost of setting up demand-side response. We are aiming to provide the first realistic opportunity for smaller commercial energy users across Britain to benefit from demand-side response.

That includes SMEs – the backbone of the UK economy – as well as smaller sites that are part of larger, multi-site estates (such as supermarket chains).

We’re now nearing the final stages of recruiting partner sites for the project and are gearing up to trial the new Quickturn service.

Q: What type/size of businesses do you think would be interested in the outcomes?

A wide range of business across commercial, industrial, public and community sectors should be interested – supermarkets and retail spaces, council buildings, office buildings, leisure centres, small manufacturing/processing facilities, hotels – to name just a few.

Q: When will results be available?

The findings will be shared in 2020 following the proof-of-concept phase.

Q: How can interested businesses find out the results?

To find out more about demand-side response and for help reducing your business’s energy bill, speak to our expert advisors today on 0808 808 2268 or email us.

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